India launches retail digital rupee

The Reserve Bank of India (RBI) on Tuesday announced that the retail digital rupee will be launched on Thursday on a pilot basis.

The central bank has identified eight banks for phase-wise participation in this trial, reports NDTV.

The retail digital rupee will be in the form of a digital token that represents legal tender. The RBI will issue digital currency in the same denominations that paper currency and coins are issued.

Retail digital rupee transactions can be carried out through a digital wallet on mobile phones and other devices. Only those digital wallets offered by banks participating in the RBI’s digital rupee programme can transact in digital currency.

The retail digital currency will be distributed through banks. Transactions in digital currency can be carried out between person-to-person (P2P) and person-to-merchant (P2M). Payments to merchants can be made using QR (Quick Response) codes displayed at merchant locations.

The retail digital rupee would offer features of physical cash like trust, safety, and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.

The retail digital rupee (₹-R) would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices.

The first phase will begin with four banks - State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank in four cities across the country. Four other banks -- Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank -- will join the trial later.